Optimal decisions of countries with carbon tax and carbon tariff
Abstract: Reducing carbon
emission has been the core problem of controlling global warming and climate
deterioration recently. This paper focuses on the optimal carbon taxation
policy levied by countries and the impact on firms’ optimal production
decisions.
Design/methodology/approach: This paper uses a two-stage game theory
model to analyze the impact of carbon tariff and tax. Numerical simulation is
used to supplement the theoretical analysis.
Findings: Results derived from the paper indicate that the demand in an
unstable market is significantly affected by environmental damage level. Carbon
tariff is a policy-oriented tax while the carbon tax is a market-oriented one.
Comprehensive carbon taxation policy benefit developed countries and basic
policy is more suitable for developing countries.
Research limitations/implications: In this research, we do not consider
random demand and asymmetric information, which may not well suited the
reality.
Originality/value: This work provides a different perspective in
analyzing the impact of carbon tax and tariff. It is the first study to
consider two consuming market and the strategic game between two countries.
Different international status of countries considered in the paper is also a
unique point.
Author: Yumei Hou, Meng Jia,
Xin Tian, Fangfang Wei, Kun Wei
Journal Code: jptindustrigg150089
